Indian defence stocks rallied following the government's announcement of a five-year extension on customs duty exemptions for imports of specific military equipment. The decision, aimed at boosting domestic defence capabilities and promoting exports, has been met with optimism by investors and industry experts alike.
The exemption, which was set to expire in July 2024, will now continue until 2029. It covers a range of military equipment not currently manufactured in India, including certain helicopters, ground support equipment, and associated components. This move is expected to help bridge the gap between domestic production and the armed forces' operational requirements.
Defence Minister Rajnath Singh recently announced an ambitious target of ₹50,000 crore in defence exports by 2028-2029, building on the record-breaking ₹21,083 crore achieved in the last fiscal year. Industry analysts predict continued growth in the sector, with the defence and aerospace market projected to reach $11.8 billion by 2029.
Shares of major defence companies such as Hindustan Aeronautics, Bharat Dynamics, and Bharat Electronics surged following the news, reflecting investor confidence in the sector's prospects. The extension is seen as a positive step towards strengthening India's defence industry and reducing its reliance on foreign imports.
However, experts caution that the exemption is not a long-term solution and that the government must focus on increasing domestic manufacturing capacity. This will require continued investment in research and development, as well as collaboration between the public and private sectors.
Overall, the extension of customs duty exemptions marks a significant development for the Indian defence industry, providing a much-needed boost to domestic manufacturers and paving the way for greater self-reliance in the years to come.
